Solana Explodes in Activity, But Is It Real or Smoke and Mirrors?

Solana Explodes in Activity, But Is It Real or Smoke and Mirrors?

Solana (SOL) has recently witnessed a surge in activity, surpassing Ethereum (ETH) in terms of transaction count and volume. However, a report from Flipside Research has raised concerns about the authenticity of this activity. The report claims that Solana's high transaction count and volume may be driven by MEV (Maximal Extractable Value) and wash trading. MEV refers to the practice of miners or validators reordering transactions within a block to maximize their rewards. Wash trading, on the other hand, is the buying and selling of an asset between two or more parties to create the illusion of trading volume. Flipside Research's analysis of Solana-based DEX Raydium revealed that a significant portion of the transaction volume appears to be inorganic or bot-driven. For instance, the FLOG-SOL pool had a liquidity of only $3 but a 24-hour trading volume of over $5 million. Such pools with extremely low liquidity are often created by meme coin scammers to facilitate exit scams. These findings suggest that the recent surge in Solana activity may not be entirely organic. Further investigation is needed to determine the extent of MEV and wash trading on the Solana network and its potential implications for users and investors.